Series | Lessons I Wish the Left Would Learn Before the Midterms

An Introduction:

Hi. I’m Nate. I’m your cousin.

I’m left-leaning and happily so. I’m very much the cousin everyone says is smart, or talented, and who got to live in Europe for a while. And who has developed some strange ideas about the US democratic experiment. I frequently wear a sardonic look, as if the current conversation about politics is exhausting in a way that is disproportionate to the number of times we’ve had it. Sometimes they are exhausting, but most of the time I'm happy if I can get you to entertain an idea that you previously thought had little to no merit.

I’m not here to tell you what you’re doing wrong. I’m not here to make you feel ashamed.

I do, however, have something I’ve seen from where I’m standing across the room that I wish you could see too.

Dave and the Farmer

Let me tell you about a very common experience.

Someone brings up a topic — wealth taxes, economic inequality, pick one — and Dave starts talking. Every family has a Dave. Dave is not a bad person. Dave is not stupid. Dave is, in this moment, talking about the "family farmer" who is going to have to sell his land, give up his inheritance, and watch his family legacy dissolve because of the wealth tax you were just discussing.

You’re talking about structure. Dave is talking about the farmer.

And here’s what’s going to happen: Dave is going to win. He wins nine times out of ten. Doesn’t matter what you bring to the table. Doesn’t matter how good your stats are, how solid your sources are, how empirically airtight your argument is. Dave wins.

And I want you to know something before we go any further.

You’re not wrong. I appreciate the sources. I appreciate the stats. I appreciate the time you spent learning this, and I appreciate the sincerity with which you present everything that is so dear to your heart. And. I agree with you.

This is not your cousin telling you you’re wrong.

This is your cousin telling you, with love, that you and Dave are arguing at completely different levels, and that’s why Dave keeps winning.

Dave’s argument is personal. It’s vivid. It’s emotional. It lands somewhere real inside people who aren’t already where you are. And that’s not a character flaw in Dave. That’s not a failure of intelligence in the people nodding along with him. That’s just how arguments work when one person is speaking from the gut and the other is speaking from a spreadsheet.

You’re not wrong. You’re just arguing at the wrong level.

And your cousin is here to help with that.

Three Levels, One Argument

Here’s the thing nobody tells you about economic debates. They’re never actually happening at one level. They’re happening at three simultaneously. And almost nobody says which level they’re operating from. So you end up with people talking past each other with great confidence and considerable frustration, each convinced the other is either lying or stupid, when the actual problem is that they’re answering different questions.

The first level is the individual. This is the level of specific people, specific stories, specific faces. The questions here are about what this person did, chose, experienced, or built. The evidence is personal and vivid. Emotionally, this is the most powerful level. It’s where Dave lives.

The second level is the system. This is the level of institutions, laws, and the rules that structure how things work. The questions here are about architecture — how is this designed, what does it reward, what does it make invisible, who does it assume as its default beneficiary? The evidence here is structural.

The third level is the pattern. This is the level of the whole economy across historical time. The questions here are about trajectories — what happens over decades, what forces shape what’s possible, what emerges from millions of individual decisions flowing through institutional structures? The evidence here is aggregate. Distributions. Trends. Historical comparisons. Piketty lives here.

Here is the crucial thing about these three levels: a claim made at one level cannot automatically answer a question at another level. You need a bridge. And that bridge, the connection between Dave’s farmer and the structural question you’re actually trying to answer, is where most economic debate either gets honest or gets slippery.

When that bridge doesn’t get built, Dave wins. Every time. Because the farmer is right there with a face and a story and three generations, and your structural argument is a graph.

The graph is correct. The farmer wins anyway.

So let’s look at what the farmer is actually doing in this argument.

The Farmer, Up Close

The family farmer argument is emotionally real. I want to be clear about that. I know an actual family that farms twenty thousand acres on the banks of the Mississippi River. Multi-generational. Solid people. They’ve sold the mineral rights to their land. They work hard. They love that ground the way people love things that took generations to build.

And they don’t have $100 million in assets.

Now here’s something important about that farm and farms like it. That land was purchased over generations. Equipment was purchased and serviced over generations. And farmers like them take out seasonal agricultural loans to buy the seed needed to plant for harvest. That land wasn’t purchased at today’s prices. Land that’s worth $3,000 or $4,000 an acre today was worth a fraction of that in 1970, or 1955, or 1938 when the first generation started accumulating it. A family that put together 20,000 acres of Mississippi Delta farmland over three generations might have paid $400 an acre on average across those decades — a total acquisition cost spread over generations of agricultural loans, inheritance, and gradual accumulation. The paper value today reflects appreciation the family didn’t engineer and can’t easily liquidate. The paper value of the land doesn't scale with the operational value and profitability of the land.

That farm — the real one, the one with the operating debt and the mineral rights already sold and the paper wealth that can’t be converted to cash without selling what took three generations to build, is genuinely not who the wealth tax is about. Not because the tax exempts them as a political favor. Because their situation is fundamentally different from the person holding $100 million in appreciated stock they’re borrowing against to fund their lifestyle.

Every serious wealth tax proposal already contains provisions for exactly this situation. Payment plans. Exemptions for operating farms. Illiquid asset accommodations. Because the people designing the policy knew the liquidity problem was real and they addressed it.

The real family farmer is already protected.

So the family farmer in the argument isn’t protecting family farmers.

He’s doing something else.

The Sleight of Hand

Here’s what’s actually happening. And once you see it you cannot unsee it.

The family farmer is an individual-level story — specific, emotional, vivid, sympathetic, being used to answer a system-level and pattern-level question: Should the tax code address the structural accumulation of wealth at the very top?

Those are different questions. Answering the second with the first requires a bridge. The bridge would need to establish something like: the class of people harmed by this policy looks substantially like the family farmer, and the harm is not addressable through exemptions and accommodations. That’s a defensible argument. But it needs to be made explicitly, with evidence about the actual distribution of wealth subject to the tax; not assumed from the emotional weight of a single sympathetic story.

The bridge never gets built. Because the goal isn’t to answer the structural question. The goal is to make sure the structural question never gets traction. And the family farmer is extraordinarily good at that job, because the moment he appears, the conversation moves from how is the tax code designed and who does that design benefit to are you really going to make this man sell his grandfather’s land.

You’re not. Nobody is. That’s already addressed in the proposal. But now you’re defending yourself against a charge that was never accurate, and the structural question has quietly left the room.

That’s the sleight of hand. Individual-level story, emotional and real, used to foreclose a structural debate. The misdirection is the point.

This is not me saying Dave is malicious. Dave received this argument in good faith because it felt true, and at the level it operates from, it is true. The liquidity problem is real. The family farmer is real. Dave is real.

But someone built this argument knowing exactly what level it operates from and exactly what level it forecloses. Dave got handed the wrong answer to the right question by people who needed him not to ask the actual question.

Your job, the cousin’s job, is to hand Dave the right question.

Who We're Actually Talking About

So let’s talk about who we’re actually talking about.

Not the farmer with twenty thousand acres on the Mississippi. Not your neighbor. Not your boss. Not anyone you went to high school with, almost certainly. Not you.

We are talking about people who hold $100 million or more in assets — specifically, in assets like stock that has appreciated enormously in value but has never been sold. Because selling triggers a tax. So instead of selling, they do something elegant and perfectly legal: they walk into a bank and borrow against the stock.

The bank gives them cash. Real cash. Spendable cash. Cash they can live on, invest with, use as a down payment on another asset, deploy as collateral for another loan. The bank accepts the stock as security because the stock is real. The bank knows it’s real. The bank is betting its own money on it being real.

But under current law, that stock — the appreciated value that the bank just accepted as collateral for a multi-million dollar loan — is not taxable. Because it hasn’t been sold. The gain is unrealized. And unrealized gains, in the architecture of the American tax code, are not income.

So we have an asset that is:

Real enough for a bank to lend against.

Real enough to use as collateral.

Real enough to generate the cash that functions as this person’s income.

Not real enough, apparently, for the IRS.

And when that person dies, the stock passes to their heirs with what’s called a stepped-up basis — meaning the accumulated gain, the increase in value across an entire lifetime, simply disappears for tax purposes. The heirs inherit the stock at its current value. The decades of appreciation that a bank happily lent against? Gone from the tax record. Never taxed. Not once.

This is not a loophole in the colloquial sense; the accidental gap nobody intended. This is the designed architecture of the system. This is what the system was built to do.

And roughly 40,000 to 45,000 people in the United States benefit from it at the level we’re discussing.

Forty thousand people. In a country of 330 million.

To give you a sense of what that number means: more Americans will die from cancer this year than belong to this group. More Americans will die in car accidents. We are talking about a class of people smaller than the annual toll of two things we already consider national tragedies, and we have organized a significant portion of our political energy around protecting their tax arrangements.

The chances that you are one of these 40,000 people are smaller than your chances of winning the lottery. I don’t mean that loosely. I mean the math works out that way.

And yet here we are. Arguing about the farmer.

What the "Farmer" Is Actually Protecting

Here’s what I need you to understand, because this is the part that matters most.

Those 40,000 people, the ones with $100 million in stock that is real enough to borrow against but structured to avoid taxation, have something else. Something worth more, in the context of a democracy, than the money itself.

They have access.

Disproportionate, structural, institutionalized access to the political system that decides whether the Social Security you have paid into your entire working life will be there when you need it. Access to the legislators who write the tax code. Access to the regulators who enforce it. Access to the think tanks that provide the intellectual framework for whatever policy outcome they prefer. Access to the media organizations that determine which questions count as serious policy debates and which get dismissed as populist resentment.

You have a vote. They have a phone number.

And while you have been arguing about the family farmer, a real person, a sympathetic person, a person whose actual situation is already addressed in every serious proposal ever written, those 40,000 people have been making sure the conversation stays exactly where they need it to be. At the individual level. With the farmer. Away from the question of whose assets are real enough for a bank but not real enough for the IRS. Away from the question of what a stepped-up basis at death actually does and who it actually benefits. Away from the question of what it means for a democracy when a group smaller than this year’s cancer mortality has more access to the decisions that shape your retirement than the other 329,955,999 of you combined.

More people in the United States will die from cancer this year than have the type and amount of wealth we are actually discussing.

And those 40,000 people have more access to the political system that decides your Social Security than you do.

We did all of this while picturing a farmer.

The Tool

So here’s what you do next time the farmer shows up. And he will show up. He is very reliable.

You don’t attack him. You don’t dismiss the liquidity concern. You don’t tell Dave that his feelings about three-generation farms are wrong. You love the farmer. You love Dave. You are the cousin at this table and you are not here to make anyone feel stupid.

You ask two questions.

First: what does this farmer actually own, and how did he come to own it?

Because the family that built 20,000 acres over three generations paid Depression-era and postwar prices for most of it, and they’re still carrying operating debt. Their paper wealth and their liquid wealth are two very different numbers. And if the concern is genuine liquidity — cash-poor but asset-rich, ask whether the proposal already addresses that. Because it does. Every serious one does. Which means the farmer in this argument is not the farmer being protected by the argument.

Second: who is actually being protected?

Forty thousand people. Smaller than the lottery odds of being one of them. Borrowing against stock that is real enough for a bank but structured to avoid taxation. Passing appreciated assets to heirs with the tax liability erased at death. And spending a portion of the returns on maintaining the political access that keeps this arrangement in place.

The farmer is the answer to the wrong question. The right question is: should assets that are real enough to borrow against be real enough to tax? Should the tax code be designed so that the primary way to avoid taxation is to be wealthy enough that you never need to sell anything?

Ask that question and you’re at the right level.

Ask it warmly. Ask it like you mean it. Ask it the way the cousin across the room asks it — not to embarrass Dave, but because you both deserve an honest answer to an honest question.

And once you’re at the right level, you can start having the right argument.

Which is, I promise you, a much more interesting conversation than the one about the farmer.

Footnotes:

This is part of a series on what I wish the left would learn before the midterms. It draws on a framework for understanding levels of analysis in economic debate — individual, systemic, and structural; and how arguments move between those levels, sometimes honestly and sometimes not. The companion piece applies that framework in full (Why We Never Seem Agree On Economics).

The series also draws on Perceptual Ethics: Toward a Theory of Moral Life That Begins Where Moral Life Actually Begins — an argument that most of what we call political disagreement is actually a perceptual problem, a question of what we’ve been formed to see and what we’ve been formed to miss. The farmer argument is a masterclass in managed perception.

All of it is written from across the room. With love.

Series | Lessons I Wish the Left Would Learn Before the Midterms

It's me. Your cousin, Nate.

This isn't a piece about kitchen table wisdom being insufficient for managing complex economies. Honestly, I wish more of what happens at kitchen tables showed up in our political and economic conversations: civility, trust, open communication, a genuine commitment to each other's wellbeing. Those things are in short supply at the policy level.

But I do want to talk about a very specific moment.

You know the moment. Someone at the table, maybe it's your uncle Dave, or it's someone who has been especially kind to you, looks up from whatever's being discussed and says, with the calm confidence of someone stating the obvious:

"Well, the government needs to learn to live within its means. Just like the rest of us."

And the table nods. Of course it does. Because it sounds exactly right. It feels like common sense. It maps directly onto something everyone in that room has actually had to do: look at what's coming in, look at what's going out, cut the second one until it fits under the first one. Responsible. Adult. Uncontroversial.

I'm sure the first time you heard it, you shook your head too, acknowledging that government spending is larger than we would all like. Then at some point you realized something is wrong with that argument. You can feel it. But you can't grab onto exactly what, because the analogy is so simple and so immediate and so grounded in real lived experience that any counter-argument you reach for sounds abstract by comparison.

Well cuz, this one's for you.

Because there's something going on in that analogy that is worth understanding; not just so you can win the argument, which is the wrong goal anyway, but because the confusion it creates is doing real damage to real policy conversations that affect real people. And your cousin, who has been stewing on this for a while, wants to help you see what it's doing.

We've Seen This Before

You may remember a while back, me explaining about a wealth tax debate and a "family farmer."

Quick recap if you missed it: Dave argues against the wealth tax by telling you about the family farmer who's going to have to sell three generations of land to pay an estate bill. You've got the numbers, the structure, the logic. Dave's got a face and a story and grandchildren who love that ground. Dave wins.

Not because you're wrong. Because you and Dave are arguing at completely different levels. He's at the individual level: specific, emotional, and vivid. You're at the structural level: aggregate, architectural, and historical. Neither of you is lying. You're just answering different questions and neither one is saying which question they think you're both trying to answer.

The household budget analogy does the same thing. The same move. The same level switch.

When someone says "the government should budget like a family," they're taking a unit of analysis, "the household," that makes genuine sense in one context, and applying it to a fundamentally different kind of entity, and then treating the conclusions that follow as obviously correct.

That's the individual unit of measure trap, wearing different clothes.

The farmer was an individual unit used to foreclose a structural debate about wealth concentration.

The household is an individual unit used to foreclose a structural debate about public investment.

Same move. Different argument.

What a Household Actually Is

Let's be specific, because specificity is what the analogy doesn't want you to be.

A household is a consumption unit. Money comes in, money goes out, and the net difference over time is your financial position. When you spend money on groceries, the money is gone. When you spend money on a car, you have an asset that depreciates. When you spend money on a house in a good market, you might get that money back and then some, eventually, if everything goes right.

The return ceiling on household spending is roughly one-to-one, and most spending comes in well below that. You don't get a future financial return on your utilities. You don't profit from your health insurance premium. Your Netflix subscription does not appreciate.

There are exceptions. A house can gain value. A good education can increase your earning capacity. Some purchases are genuine investments. But even your best household investment has a structural constraint: whatever return it generates goes to you. To your family. The returns are captured by the unit that made the expenditure.

This is exactly how it should work for a household. It's the right accounting system for the right entity.

A government is a different entity. And that difference is not a matter of scale. It's a matter of kind.

What a Government Actually Is

Here's an analogy that works better than the household one.

Imagine you own the town. Not a house in the town. The town. The roads, the water system, the school, the fire station, the whole thing.

If you build a road to the industrial park, the road costs you money. A household doing this calculation would call it a loss: money out, nothing coming directly back in. But you're not a household. You're the town. The road enables the industrial park to function, which creates jobs, which means people can afford to live there, which means property values support the tax base, which means you can afford the next road. The return on your investment is not captured by the road. It is distributed across the entire system you are responsible for maintaining. And a portion of it flows back to you through exactly those mechanisms. Taxes are one of those systems.

That's not a household. That's infrastructure logic.

The government is the infrastructure. It is not one agent in the economy making choices in response to external conditions. It is a structural component of the economic system and its choices constitute the conditions that everyone else's choices happen inside of.

This is why "the government should balance its budget like a household" is not a simplification. It is a category error. It takes the accounting logic appropriate for a consumption unit and applies it to a productive system with macro-level feedback loops that don't exist at the household level.

Your family cutting its spending does not affect the economic conditions your family earns its income in. The feedback between your household decision and the macroeconomy is so attenuated as to be functionally zero.

When the government cuts spending, it removes demand from the economy. It doesn't just reduce its own outflows. It changes the conditions, employment levels, business revenue, household income, that determine what flows back in. A government that cuts spending during a recession isn't being responsible the way a household is responsible. It's removing the floor from the system.

Your family saving during a recession is prudent. The government doing the same thing, at the same moment, for the same reason, turns a recession into a depression. What is rational for one unit is destructive when the entity is the whole system.

The farmer was one unit standing in for a structural question about wealth concentration. The household is one unit standing in for a structural question about how economies actually function. Same move.

Costco

I want to tell you about the Costco food court.

If you've been to Costco, you know the food court. Hot dog and a soda, $1.50. They have held that price since 1985. The CEO has said publicly that they will hold it. Not because they make money on it. They sell it at or near cost, on purpose, with full awareness that the margin is gone.

Why? Because the people who come to Costco for the hot dog buy other things. The foot traffic the food court generates produces returns through the rest of the store that dwarf the cost of the food court itself. The investment makes sense not because of what it directly returns, but because of what it enables throughout the system.

Now: does anyone look at Costco's food court and say they need to "run their business like a household"? Does anyone tell Costco that responsible businesses don't price things at cost to drive foot traffic?

No. Because everyone intuitively understands that a business is not a household. The accounting is different. The feedback loops are different. The unit of analysis is different.

The government is, in this respect, more like Costco than like your family. Except the government can capture returns that Costco cannot. When the government invests in early childhood education, genuinely invests, quality programs, the ones James Heckman spent his career studying, the return doesn't come back to the education budget. It comes back as reduced incarceration costs, reduced remedial education costs, higher wages, increased tax revenue, better health outcomes, reduced healthcare spending. Between $7 and $13 back for every dollar in. Some studies show higher.

Heckman is a Nobel laureate in economics. He won for his work on econometric methods, but he has spent decades applying that rigor to early childhood investment, and the findings have held up across multiple independent studies. And for my family living in North Carolina, he did this research right here in our home state! It is not a partisan claim. It is one of the most consistently supported findings in the field.

But a household doesn't get to capture that return, because a household isn't the system. A government does, because it is.

The household analogy makes this investment look irresponsible. A consumption unit spending money it doesn't have on programs with no visible return. That's the picture the analogy paints, and it's wrong in the specific way that using the wrong unit of analysis is always wrong: it makes the right answer invisible.

Five Ways the Analogy Fails

I don't want to just hand you "you're wrong," because that won't move anybody anywhere. So here are five ways the analogy fails. Pick one or two that stick with you. We're not winning an argument — we're replacing a distorted picture with something more accurate. Something that makes them second-guess the mental shortcut.

A household can't create its own demand.

When your family cuts spending, the broader economy doesn't change. When the government cuts spending, aggregate demand in the economy falls. The government is large enough that its financial behavior constitutes economic conditions, not just responds to them. A household that borrows to invest in a business doesn't change the macroeconomy. A government that borrows to invest in infrastructure changes what the macroeconomy looks like for everyone.

A household has a finite lifespan.

You cannot take out a 50-year mortgage if you're 60, because you won't be around to see it through. A government is theoretically indefinite. It can make investments whose returns mature in 20 or 30 years because it will still exist in 20 or 30 years. The interstate highway system was designed for a time horizon no household can plan to. So was the internet, which was funded publicly. So is early childhood education, whose full fiscal returns don't arrive for two decades. Household logic forecloses all of these investments by definition. Government logic can hold them because the planning horizon isn't bounded by mortality.

A household's debt goes to an external creditor.

When your family goes into debt, you owe someone outside your family, and they get richer while you get poorer. When the US government issues Treasury bonds, the majority are held domestically, by American institutions, pension funds, the Federal Reserve, and individual investors. The debt is, to a significant degree, money the American economy owes to itself, in a currency the US controls. This is not to say public debt is without consequences, and it isn't. But it is structurally different from consumer debt in ways that the household analogy erases completely.

Households cannot print the currency they owe.

A household in debt must repay from income it earns in a currency it does not control. A national government that borrows in its own currency is in a genuinely different position. It has tools, monetary policy, exchange rate effects, inflation management, that no household has access to. These tools have real constraints and real risks. But they exist. The analogy treats the government as if it faces the same hard currency constraint a household does. It doesn't.

The consequence of a household going broke is contained. The consequence of a government going broke is not.

If your family can't pay its bills, your family suffers. It's genuinely terrible and it shouldn't happen to anyone. But the suffering is contained within the household and the people who depend on it. If a government loses its ability to function, the suffering is not contained anywhere. It radiates outward across the entire system: every family, every business, every institution that depends on stable infrastructure, stable currency, and stable governance. The stakes of the two kinds of "going broke" are not comparable. Treating them as equivalent is not a simplification. It is a misrepresentation of what is at risk.

Why This Analogy Exists

I want to be fair here, because your cousin is always going to try to be fair.

Some of the people who use this analogy use it because they genuinely believe it. It does feel true. It maps onto real experience. It's not stupid to find it intuitive.

But some of the people who use it know exactly what it's doing.

The household analogy has a specific political function: it makes government investment look like irresponsible spending by reframing the accounting system. If you accept the household frame, then any public expenditure that doesn't produce an immediately visible, directly recaptured return looks like waste. Early childhood education looks like waste. Infrastructure looks like waste. Public health systems look like waste. Because in a household, they would be.

Once that frame is accepted, the policy conclusion that follows is not the result of analysis. It's built into the premise. You started with the wrong unit and you'll end with the wrong answer. Every time.

The people who need you to accept that frame are not the people who want government to invest in what makes your life better or protects your voice in it. They are the people who'd prefer government tax your income while protecting their assets. Because they don't get paid income. They get paid in assets.

The household analogy doesn't just describe a position on government spending. It forecloses a whole category of policy conversation before the conversation begins. Just like the farmer foreclosed the conversation about wealth concentration. Different furniture. Same mechanism.

What You Say at the Table

You don't pick a fight. We're all part of the family and you're not here to make anyone feel stupid.

But you can ask a question.

"When Costco prices their hot dogs at cost — no profit, just to bring people in the door — do you think that's irresponsible?"

Let them answer. They'll say no, that makes sense, that's business.

"What makes it make sense?"

They'll say because the returns come back through the rest of the store. Because the overall system is profitable even when a single piece of it isn't making money on its own.

"Right. So the accounting only makes sense if you look at the whole system. Not just the hot dog."

Then:

"What if I told you that every dollar invested in quality early childhood education comes back between seven and thirteen dollars through higher wages, lower incarceration costs, better health outcomes, more tax revenue? Not to the childcare budget. To the whole system. Is that irresponsible?"

You're not telling them they're wrong. You're moving the frame. You're saying: the unit matters. You picked the household unit. Let me show you what happens when you pick the right unit.

If they say, "No one has proved government investments make money or return value," then they are denying falsifiable claims. If they can't accept empirical data, then their argument isn't in good faith and you can choose to exit the conversation.

If they are willing to wrestle with empirical data, then that's the conversation worth having.

The household budget analogy feels like common sense because it is common sense — for the entity it describes. A household really should live within its means. That's real and it's right.

But a government isn't a household. It's the system the household lives inside. And managing a system by the logic appropriate for one unit within that system is not prudence.

It's using the wrong tool. And when the wrong tool keeps producing the wrong answer, at some point you have to ask whether the tool got selected by accident.

Part of a series on What I Wish the Left Would Learn Before the Midterms. Part One is about the family farmer and what he's actually doing in the wealth tax argument. This one is about units of analysis and how the same trap gets set with different bait.

All of it is written from across the room. With love.

Some things look like markets. They have prices, sellers, contracts, all the vocabulary. But they don’t behave like markets, and pretending they do has cost us forty years.

Start with a question you’ve probably asked yourself

Why does everything essential keep getting more expensive?

Not everything, actually. Televisions are cheaper than they’ve ever been. Clothing, in real terms, costs less than it did when your parents were young. Airfare, computers, toys: the market did what markets are supposed to do, and prices fell or held steady while quality rose.

But healthcare. Housing. Childcare. College. Water bills, electricity, internet. These didn’t just rise with inflation; they rose at multiples of it, decade after decade, until a middle-class life that one income could cover in 1980 now strains two.

So here’s the real question: why those categories and not the others? What do healthcare, housing, childcare, education, water, electricity, internet, and food access have in common that televisions don’t?

It’s not that they’re run by worse people. It’s not bad luck. It’s structure, and once you see the structure, you can’t unsee it.

The four conditions

Economists have a technical definition of a “public good”: something you can’t fence off (like clean air) and that doesn’t get used up when one person enjoys it (like a lighthouse beam). By that definition, healthcare and housing aren’t public goods. You can absolutely be locked out of a hospital or an apartment. So mainstream economics files them under “private goods with some market failures,” and the policy conversation follows from there: tweak the incentives, add a subsidy, run an information campaign.

That filing is wrong, and it’s been producing wrong answers for forty years.

What actually matters isn’t whether something fits the textbook definition. It’s whether four conditions show up in the same place at the same time:

First: you can’t walk away. Economists call this inelastic demand. You cannot opt out of healthcare when you’re sick. You cannot opt out of shelter, or food, or the electricity that keeps your insulin cold. When the price goes up, you still have to buy. The seller knows this.

Second: there’s nowhere else to go. One broadband company serves your address. One hospital system runs every ER within an hour. A handful of landlords own the rentals in your part of town. The whole point of a market is that competition punishes overcharging. When competition is gone, the punishment is gone, whether or not anything technically qualifies as a monopoly.

Third: being priced out isn’t an inconvenience; it’s a harm. Skip the streaming service and you miss some shows. Skip insulin, or heat in January, or a home, and you are in genuine danger. The severity of the harm removes your exit option in a second, deeper way: it’s not just that you don’t want to leave. You can’t survive leaving.

Fourth: we’ve already run the experiment. This isn’t a prediction about what private provision might do. It’s a record of what it has done. Forty years of results are in, and by any honest reading, private provision in these sectors has not delivered fair access at sustainable cost.

Here’s the thing to hold onto: where all four conditions stack up in the same sector, overcharging isn’t a risk. It’s a guarantee. Not because the people involved are greedy monsters, but because the conditions make it the easiest path available. Which brings us to the mechanism.

Nobody has to be a villain

This is the part where most political arguments go wrong, so let’s slow down.

Organizations behave a lot like people: they conserve energy, chase rewards, avoid pain, and settle into whatever equilibrium requires the least friction. In a genuinely competitive market, the lowest-friction path includes treating customers well, because customers who feel mistreated leave. That’s the whole trick of markets. It’s a good trick.

But change the conditions and you change the path. In a sector where customers can’t leave, the lowest-friction path shifts: charge more, maintain less, and let the costs land on people who have no exit. No conspiracy required. The hospital administrator who approves an aggressive billing policy isn’t necessarily a bad person. She’s making a locally reasonable decision inside a system that rewards it and, crucially, shields her from ever seeing what it does.

That shielding matters more than it sounds. The executive who sets hospital prices will never have medical debt. The utility board that approves rate hikes will not lose heat in February. The landlord who owns 85,000 houses will never experience housing instability. The distance between the decision and its consequences isn’t a side effect of power in these sectors. It’s what the power is. And when decision-makers never feel the results of their decisions, the people harmed become steadily harder for them to see. Not through malice. Through insulation.

One more idea, borrowed from the philosopher Philip Pettit, sharpens the picture. Pettit argues that domination isn’t just the use of arbitrary power over you; it’s the existence of that power when you have no alternative. Think of a bully. A bully doesn’t have to be actively hitting you to change your behavior. You walk different hallways. You watch the clock. You shrink a little, preemptively, because you know what he could do. Now, with an ordinary bully, there’s at least an answer: people can choose not to be around bullies. You change schools, change jobs, change neighborhoods. But you can’t do that here. There is no hallway that routes around the only hospital system in your county, no schedule that avoids the rent. Structural extraction is bullying you cannot walk away from, and it changes your behavior the same way. You don’t fight the bill. You don’t push for the referral. You ration your own care preemptively. The power works even while it rests.

This is why the usual fixes fail. Consumer awareness campaigns, choice initiatives, marginal regulations: they all assume the system is malfunctioning and just needs better information. It isn’t malfunctioning. It’s responding correctly to its incentives. If the outcomes are wrong, the architecture is wrong, and the architecture is what has to change.

The accelerant: private equity

Everything described so far happens under ordinary ownership. Private equity is what happens when a business model is purpose-built to run that dynamic at maximum speed.

Here’s the model, plainly. A private equity firm buys a hospital chain, a nursing home network, a childcare company, a housing portfolio, or a water system, using mostly borrowed money. The debt doesn’t go on the firm’s books. It goes on the acquired company’s books. The hospital now owes the money that was borrowed to buy the hospital.

So the hospital must generate enough cash to service that debt and deliver the returns the fund’s investors expect, all within the typical five-to-seven-year window before the firm sells and moves on. In a competitive market, that pressure would be impossible to sustain; customers would flee. In a sector where customers can’t flee, the pressure gets passed straight through: onto patients through billing, onto tenants through rent hikes and skipped repairs, onto children through thinner staffing, onto towns through closed service lines. And whatever long-term damage the squeeze causes (the deferred maintenance, the hollowed-out workforce, the fragile balance sheet) becomes the next owner’s problem, or the community’s. The firm is gone by then. The community isn’t.

The evidence here is not vibes. It’s peer-reviewed.

In healthcare: a 2023 study in JAMA found that private equity acquisition of hospitals was followed by a roughly 25 percent increase in hospital-acquired complications: falls, infections, central line problems. A National Bureau of Economic Research study of nursing homes found PE acquisition associated with about a 10 percent increase in short-term deaths among Medicare patients. PE-owned physician staffing firms became the main engine of “surprise billing,” a practice so pervasive that Congress passed a law, the No Surprises Act, specifically to stop it. And when Steward Health Care collapsed in 2024 after years of PE ownership, communities in eight states faced sudden hospital closures. The pattern repeats: buy, load with debt, extract, exit, and let someone else absorb the wreckage.

In housing: during the foreclosure crisis, when ordinary buyers couldn’t get mortgages, institutional investors with cash bought tens of thousands of single-family homes at depressed prices. Invitation Homes, the largest single-family landlord in the country, was assembled from a Blackstone portfolio this way (Blackstone has since sold its stake, but the crisis-era origin isn’t disputed). The industry likes to point out that institutional owners hold under one percent of homes nationally. True, and beside the point: housing markets are local. A company invisible in the national statistics can still be one of the two or three biggest landlords in your metro area, which is exactly where pricing power lives. Federal Reserve research has linked institutional purchases to higher local rents and lower homeownership rates. And in apartment buildings, the Justice Department sued the software company RealPage for enabling nominally competing landlords to coordinate rents through a shared pricing algorithm; RealPage settled in late 2025, agreeing to stop using competitors’ private data in its recommendations. Call it what it structurally is: cartel behavior in a sector where the customers can’t leave.

In childcare: the playbook is especially clean. Buy centers, cut staffing to the legal minimum, hold worker pay down, then sell the buildings to a real estate trust and lease them back at inflated rates, saddling the operation with occupancy costs designed to maximize what can be pulled out. The results are visible on both ends: childcare workers earn a median of about $14.60 an hour, among the lowest wages of any licensed profession, while families pay costs that in many states exceed college tuition. The gap between poverty wages on one side and unaffordable prices on the other is not a mystery. It’s the margin.

Notice what this evidence lets us say. Ordinary investment means putting money into something so it grows; the investor wins when the company thrives long-term. What PE does in these sectors is the opposite: pull value out fast and leave before the bill arrives. Same legal paperwork, opposite function.

What actually works

Here’s where the argument turns constructive, and where it gets persistently misrepresented, so let’s be precise about what’s being claimed.

Calling something a common good sector is not a call to nationalize it, ban private business, or put the government in charge of everything. The claim is narrower and, honestly, more market-friendly than its opponents admit: where all four conditions hold and private provision has demonstrably failed, there must be a genuine public alternative. Not a subsidy. Not a regulation. An actual alternative that people can choose.

Why an alternative rather than just rules? Two reasons.

First, it restores the exit. Markets discipline sellers only when buyers can leave. A public option at cost-based pricing recreates the exit that concentration destroyed. Private providers can still operate, still compete, still profit. They just can’t charge captive-audience prices anymore, because the audience is no longer captive. This is the least intrusive fix available: it doesn’t tell private firms what to charge. It simply makes overcharging unprofitable again, which is what competition was supposed to do all along.

Second, it makes the truth measurable. When Medicare exists next to private insurance, we can compare overhead. When a city runs its own broadband, we can compare speeds and prices. Without the public benchmark, the private market gets to claim its prices reflect the true cost of provision, and nobody can prove otherwise. This, incidentally, is a big part of why incumbent industries fight public options so ferociously: not just the lost customers, but the lost cover.

And the track record? The standard objection is that government provision is inherently inefficient. That’s an empirical claim, so check it empirically:

Healthcare. Every wealthy peer nation covers everyone at 40 to 60 percent of what Americans pay per person, with better average outcomes. Their systems differ (single-payer, regulated multi-payer, hybrids), but they share one constant: some public structure sets a floor under pricing. On administrative costs, the famous “Medicare 2 percent vs. private insurance 12–18 percent” comparison is genuinely contested; Medicare’s older, sicker population inflates the denominator, and fairer per-person accounting narrows the gap. But even under the most conservative accounting supported by CBO and MedPAC work, private insurance carries meaningfully higher overhead, worth on the order of $80 billion a year across the system, and possibly double that. That money buys billing departments, prior-authorization queues, and denial letters. It does not buy healthcare.

Housing. In Vienna, about 60 percent of residents live in municipal or cooperative housing, maintained at good quality, at roughly a third of market cost. Singapore houses about 80 percent of its people in public housing that residents own and build wealth through. The shared design principle: keep a chunk of the housing stock permanently outside the speculation cycle, so it anchors prices for everyone. America’s closest homegrown versions, community land trusts and limited-equity co-ops, work fine; they just don’t exist at scale yet. (And no, the failed American housing projects of the last century don’t refute this. Those failed by concentrating poor families in isolated towers, a design failure, not proof that public housing can’t work. Vienna is the counterexample, sitting in plain sight.)

Childcare. France’s crèche system, the Scandinavian models, and Canada’s $10-a-day program differ in detail but converge on the result: more parents working, better outcomes for kids across income levels, and net positive returns to the public purse. The American research base agrees. James Heckman won a Nobel Prize partly for methods that catch statistical bias in imperfect studies, and when he turned those very methods on the flagship Perry Preschool data (whose original randomization had real problems), the effects held: an estimated $7 to $12 back for every dollar invested in high-quality early childhood programs, through lower crime, less remedial education, higher lifetime earnings. That’s not a projection. It’s measured lifetimes.

Utilities and broadband. Rural electric cooperatives built under the New Deal have beaten investor-owned utilities on cost and reliability for eighty years. Mature municipal broadband networks routinely deliver higher speeds at lower prices than the incumbents. The record has failures, and they’re instructive: the networks that struggled were underfunded, under-scaled, or built in states where incumbent lobbyists had already passed laws designed to make them fail. More than twenty states restrict or ban municipal broadband. Ask yourself why an industry confident in its own efficiency would need laws forbidding the comparison.

Water deserves a special word, because it’s the case where the argument should already be over. Demand is perfectly inelastic (you die without it), the pipe network is a natural monopoly (nobody sane builds competing pipes to your house), and the harm from shutoff is immediate. Yet privatized systems keep producing the same pattern: rate increases of 50 to 100 percent within five years, quietly deferred maintenance, and regulators gradually captured by the companies they oversee, until the harm surfaces as lead in the pipes or shutoffs in poor neighborhoods, by which point the oversight machinery has already been compromised. Public and cooperative water systems, the norm in peer nations and in most of America before the privatization wave, don’t have this pattern, because they don’t have the extraction motive that drives it.

Across every sector, the same finding: public or cooperative alternatives deliver better outcomes at lower cost than private provision operating without competition. The “government is inefficient” claim survives in political talk shows. It does not survive the data. It persists because the industries that benefit from it can afford to keep it alive.

The other half: keep private equity out

Public options are half the design. The other half is a prohibition, and it follows from everything above.

If common good sectors require long time horizons (water infrastructure is planned in fifty-year increments; a child’s development can’t be paused for a fund cycle), accountability to consequences, and debt loads compatible with the mission, then the PE model, which is defined by short horizons, exit-before-consequences, and maximum leverage, is structurally incompatible with these sectors. Not morally suspect. Structurally incompatible, the way a drag racer is incompatible with a school bus route.

This isn’t an argument against private ownership of hospitals or childcare centers. Family-owned, physician-owned, cooperative, conventional corporate: all can work. It’s an argument against one specific ownership model, and banning an ownership model from a sensitive sector is not some radical novelty. Glass-Steagall barred banks from combining commercial and investment banking for sixty years. The FCC caps media ownership concentration on public-interest grounds. The tools already exist: ownership disclosure requirements, limits on debt loading in covered sectors, mandatory long-term operating commitments as a condition of acquisition, personal liability for fund managers whose portfolio companies collapse after exit, and regional market-share caps.

Neither half works alone. Public options without PE limits get strangled politically by incumbents with extraction money to spend. PE limits without public options leave the concentrated market intact, just slightly slower. The design needs both, because both aim at the same target: reconnecting decisions to their consequences.

What remains when the arguments run out

Every version of this proposal gets met with the same words: overreach, socialism, inefficiency, killing innovation. Notice what those words have in common. None of them engages the evidence. The efficiency claim has been tested in every peer nation and every sector reviewed here, and it lost. The accountability claim has been tested everywhere private equity has operated in these sectors, and it lost too. When a position keeps losing on evidence but keeps winning in politics, you’re no longer looking at an argument. You’re looking at an interest, wearing an argument’s clothes.

And that, finally, is why the naming matters. “Common good sectors” isn’t a slogan; it’s a diagnosis, and a testable one. Any of these eight sectors could, in principle, fail the four-condition test. None of them do. They are not eight separate problems needing eight separate bills. They are one structural pattern appearing eight times, and one pattern can be designed against, once we stop calling it a market and start calling it what it is.

The evidence has been in for decades. The open question was never what works. It’s whether we can build the political will to act on what works faster than the people profiting from the current design can prevent it.